UK consumers borrow more frequently than their European neighbours, despite having high financial literacy, a report from Intrum has found.
The seventh annual European Consumer Payment Report by Intrum, surveyed over 24,000 consumers across 24 European countries and identified a “nervousness” over Brexit.
The survey found the UK came second in financial literacy with 75 percent of consumers matching financial terms to their correct definitions. Despite this, 22 percent of UK consumers have borrowed money to pay their bills, and 63 percent of this group have done so on more than one occasion.
This is almost double the European average of 38 percent. And while 42 percent of UK consumers expect to be better off than their parents, the same percentage are concerned that Brexit will have a negative impact on personal finances.
Younger consumers are facing greater difficulties according to the report. Around 58 percent of 18-21 year-olds surveyed have been forced to borrow money to pay their bills in the last six months alone. Almost half cited the fact that bills are increasing at a rate faster than their income.
Despite the dependence on debt to pay their bills, 78 percent of UK consumers are still managing to save money each month, although almost half are not satisfied with the amount of money they are able to put aside. The top reason for saving among UK consumers is the risk of unexpected expenses, in contrast, a quarter of those surveyed admitted they would rather spend their money enjoying today than saving for a comfortable retirement.
The role of technology in personal finances for the UK consumers is varied. On one hand, technology is seen as an enabler, with 22 percent using their smartphone to avoid over-consumption and 67 percent saying technology has made it easier to handle their finances.
In contrast, 56 percent of users are concerned that the use of smartphone apps tempts consumers into unaffordable loans and 57 percent worry about its security. This is coupled with the effects of social media pressure, where 50 percent of 18-21 year olds saying it puts pressure on them to consume more than they should.
Intrum’s UK managing director Eddie Nott said that the UK’s reliance on credit means “they don’t have the reserves to cope with the financial impact of a significant life event”.
The unpredictable nature of job loss, illness or bereavement “often leads to problem debt”, Nott said, adding that he believes technology has further to go in helping UK consumers overcome concerns and managing their personal finances.